It seems there are lots of things holding this back, such as loyalty to staff. But the next year and a half will see SME's outsource more IT.

Bharat Vagadia, the NOA's SME Director said: "Although it's true that the SME community has not embraced more strategic outsourcing in the way we had envisaged at the start of the year, the signs are still promising. There are a number of reasons why SMEs have not yet warmed to outsourcing, including the fact that they are typically extremely loyal to their employee base. Many SMEs also need educating as to the value of outsourcing and offshoring, and with limited budgets in place, they can feel that they are not able to seek the right level of advice.

"However, I still think that we'll see SMEs wake up to outsourcing in the next 12-18 months. The underlying drivers are all in place to make outsourcing a success in the sector, and more and more suppliers are beginning to target SMEs, as it's obvious that there's an opportunity there for them. For example, Tata are rolling out a dedicated SME offering in India as a testbed which, if successful, will make its way over to the UK. Increased interest from suppliers should mean an increased level of education for end-users - and that could be the breakthrough that's needed for outsourcing to succeed."